Questions 1 to 5 are related and share the same information:

Gold is trading at $1200, but one year Gold contracts are trading at $1100. The CME defines the Gold contract as 100 ounces/c, $/c, $9,000, $7,000. Your commodities broker quotes you $11/ ounce storage and insurance, $100/ounce borrowing fee on gold, and 8.5% on cash balances  all per annum. 

1. JQ Investor decides to arbitrage this price difference using 300 ounces of Gold. JQ must

 Sell gold and buy gold futures contracts 

 Buy gold and buy gold futures contracts

 Buy gold and sell gold futures contracts

 Sell gold and sell platinum futures contracts

 

QUESTION 2

and trade a total of ______ gold contracts (whole number)

(refers to the above problem statement)

QUESTION 3

If JQ takes this arbitrage right to delivery he will make a profit (loss) of $ ________(dollars, rounded to two places after the decimal)

(refers to the above problem statement)

QUESTION 4

The cost of carry is $ _____ /ounce(dollars, rounded to two places after the decimal)

(refers to the above problem statement)

QUESTION 5

The futures price at which arbitrage is no longer profitable is $ ________(dollars, rounded to two places after the decimal)

(refers to the above problem statement)

QUESTION 6

Questions 6 to 10 are related and share the same information:

Platinum is trading at $1000, but one year Platinum contracts are trading at $1200. NYMEX defines the Platinum contract as 50 ounces/c, $/c, $11,000, $8,000. Your commodities broker quotes you $13/ ounce storage and insurance, $300/ounce borrowing fee on platinum, and 7.5% on cash balances all per annum. JQ Investor decides to arbitrage this price difference using 300 ounces of Platinum. JQ must

Sell platinum and buy platinum futures contracts

Buy platinum and buy platinum futures contracts

Sell platinum and sell platinum futures contracts

Buy platinum and sell platinum futures contracts

QUESTION 7

and trade a total of _______ platinum contracts.(whole number)

(refers to the above problem statement)

QUESTION 8

If JQ takes this arbitrage right to delivery he will make a profit (loss) of $ ________(dollars, rounded to two places after the decimal)

(refers to the above problem statement)

QUESTION 9

The cost of carry is $ ________ /ounce(dollars, rounded to two places after the decimal)

(refers to the above problem statement)

QUESTION 10

The futures price at which arbitrage is no longer profitable is $ _______(dollars, rounded to two places after the decimal)

(refers to the above problem statement)

QUESTION 11

David D. Investor manages an equity portfolio with a market value of $4,000,000. The portfolio beta is 2.6. David D. finds this somewhat overly aggressive for the client's risk profile and sells 19 S&P500 futures contracts. The contract is defined as $250 times index and is currently trading at 1802. David D. anticipates that this hedge will reduce the portfolio beta to ________ (rounded three places after the decimal

QUESTION 12

Questions 1213 are related and share the same information:

David D. Investor manages an equity portfolio with a market value of $5,500,000. The portfolio beta is 2.0. David D. finds this somewhat overly aggressive for the client's risk profile. The S&P500 futures contract is defined as $250 times index and is currently trading at 1354. To reduce the portfolio beta to 0.6 David D. should BUY / SELL _______ S&P contracts. (enter 1 to BUY or enter 0 to SELL)

QUESTION 13

How many _________ S&P contracts?(whole number)

(refers to the above problem statement)

QUESTION 14

You sell 8 January light sweet crude oil contracts at 104.32. The contract is defined as 1,000 barrels, $/b, $1100, $800. You close out in January at 105.41. Your profit (loss) on this transaction is $_________(dollars,rounded to two places after the decimal)

QUESTION 15

SUV stock declares a $0.81/share dividend on October 10, payable on November 19 to holders of record October 31. If you buy 600 shares of SUV on October 30 at $55.67/share and sell it on November 5 at $53.81/share, you will earn total returns of ______ %(percent, rounded three places after the decimal)

QUESTION 16

We expect a return on the market of 10.900% and a risk free rate of 2.500%. We expect that in this market Cerigo Olive Oil will generate a return of 20.400%. Thus we can calculate that Cerigo Olive Oil has a beta of _________ (rounded three places after the decimal)